01—Abstract
Summary
Summary of the 10-K filed February 28, 2022. Cited figures are marked; the original filing is the authoritative source.
Nucor Corporation, a Delaware corporation, manufactures steel and steel products and is North America's largest recycler, using scrap steel as its primary raw material.
It reports three segments: steel mills, steel products and raw materials. In 2021 the company recorded record results: net earnings of $6.83 billiona, or $23.16 per diluted share, on net sales of $36.48 billion, up 81% from $20.14 billion in 2020. Net earnings attributable to Nucor stockholders were 18.7% of net sales and return on average stockholders' equity was 55.0%.
Average sales price per ton rose 64%, from $789 to $1,292,b while the average cost of scrap and scrap substitutes rose 62%, from $290 to $469 per gross ton. Cash flow and capital returns were strong. Cash provided by operating activities was $6.23 billion, and capital expenditures were $1.62 billion.
Nucor repurchased $3.28 billionc of common stock in 2021 and paid $1.62 per share in dividends. In December 2021 the Board raised the quarterly dividend to $0.50 from $0.405, and about $3.85 billion remained available under the share repurchase authorization at year-end. Cash, short-term investments and restricted cash totaled $2.76 billion, and the company reported net debt to total capital of about 14% and an undrawn $1.75 billion revolving credit facility.
Management also disclosed significant growth investments, including the $1.70 billiond Brandenburg, Kentucky plate mill, a planned West Virginia sheet mill with expected capital expenditures of about $2.70 billion, and the February 2022 acquisition of a majority stake in California Steel Industries. The filing also flags material risks.
These include global steel overcapacity, volatile scrap and energy costs, competition from imports and substitute materials, cyclical end markets, climate and carbon regulation, and cybersecurity threats. The company expects 2022 to be another strong profitability year, but it anticipates that first-quarter 2022 net earnings attributable to Nucor stockholders will be slightly lower than the record fourth quarter of 2021, with steel mill segment earnings expected to decline.
02—Key points
Key Highlights
- Record 2021 results: net earnings of $6.83 billion ($23.16 per diluted share) versus $721.5 million ($2.36 per share) in 2020, on net sales of $36.48 billion, up 81%.
- Average sales price per ton rose 64% to $1,292 while average scrap and scrap substitute cost per gross ton rose 62% to $469, with gross margins of $11.03 billion (30% of sales) versus $2.23 billion (11%) in 2020.
- Cash provided by operating activities was $6.23 billion, and capital expenditures were $1.62 billion in 2021.
- Nucor repurchased $3.28 billion of common stock in 2021, with about $3.85 billion remaining under the $4.00 billion authorization approved December 2021, and the quarterly dividend was raised to $0.50 per share from $0.405.
- Balance sheet remains strong: cash and short-term investments of $2.76 billion, net debt to total capital of about 14%, credit ratings of Baa1/A-, and an undrawn $1.75 billion revolving credit facility.
- Growth pipeline includes the $1.70 billion Brandenburg, Kentucky plate mill (expected start-up in Q4 2022), a planned West Virginia sheet mill with about $2.70 billion of expected capital expenditures, and the February 2022 acquisition of a majority stake in California Steel Industries for a $400 million cash price.
- Q1 2022 outlook: net earnings attributable to Nucor stockholders expected to be slightly below the record fourth quarter of 2021, with steel mills segment earnings expected to decline.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 28, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $36.48B$20.14B | +81.2% |
| Cost of Revenue | $25.46B$17.91B | +42.1% |
| Gross Profit | $11.03B$2.23B | +394.9% |
| SG&A Expenses | $1.71B$615.04M | +177.5% |
| Interest Expense | $163.12M$166.61M | −2.1% |
| Net Income | $6.83B$721.47M | +846.3% |
| EPS (Basic) | $23.23$2.37 | +880.2% |
| EPS (Diluted) | $23.16$2.36 | +881.4% |
| Shares Outstanding (Basic) | 292.49M303.17M | −3.5% |
| Shares Outstanding (Diluted) | 293.39M303.27M | −3.3% |
05—Questions
Frequently Asked Questions
How profitable was Nucor in 2021 compared with 2020?
Net earnings attributable to Nucor stockholders were $6.83 billion, or $23.16 per diluted share, in 2021, compared with $721.5 million, or $2.36 per diluted share, in 2020. Net sales rose 81% to $36.48 billion, and return on average stockholders' equity was 55.0% versus 6.8% in 2020.
What drove the increase in Nucor's earnings?
The filing attributes the increase mainly to metal margins in the steel mills segment, where average selling prices increased faster than the cost of scrap and scrap substitutes. Higher volumes, strong nonresidential construction demand in the steel products segment, and higher prices in the raw materials segment also contributed. Steel mills segment earnings before income taxes were $9.74 billion in 2021 versus $720.2 million in 2020.
How much is Nucor returning to shareholders and how much capacity remains?
Nucor repurchased $3.28 billion of common stock in 2021 and paid dividends of $1.62 per share. It intends to return at least 40% of net earnings to stockholders over time. At December 31, 2021, approximately $3.85 billion remained available under the share repurchase program.
What are the main risks identified in the filing?
Key risks include global steel overcapacity that could increase imports, volatility in scrap, energy and electricity costs, competition from other steel producers and alternative materials, cyclical demand tied to construction and other industries, climate and greenhouse gas regulation, cybersecurity threats, and COVID-19 impacts on operations and capital projects.
What is Nucor's outlook for 2022?
Management expects 2022 to be another strong profitability year, with end-use demand remaining strong. However, it expects first-quarter 2022 net earnings attributable to Nucor stockholders to be slightly reduced from the record fourth quarter of 2021, with steel mills segment earnings declining and steel products segment margins expanding. Capital expenditures are projected at about $2.3 billion in 2022.
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